Electric Vehicle Rule Mixes Bad Economics, Unlawful Overreach

Despite courts becoming increasingly skeptical of the authority claimed by administrative agencies, some such as the Environmental Protection Agency are working to reconfigure the nation’s economy through dubious claims of statutory authority.

For example, Donald Trump’s win in the 2024 presidential election has little short-term effect on the EPA’s rule creating an electric vehicle mandate. Because the EV mandate is in a promulgated final rule, and it takes a rule to revoke or replace a rule, the incoming administration can’t just revoke the mandate. The rule remains in effect until the long and difficult process of conducting a new full notice and comment rulemaking to change it.

Nothing in the Clean Air Act permits the EPA to ban gas-powered vehicles outright, nor would Congress ever allow such a ban. But while the EPA says the mandate isn’t a ban, it might make it impossible for you to find the type of car you want to drive on the car sale lots if it’s powered by gas.

As a matter of judicial interpretation, a de facto ban on gas-powered vehicles would clearly be one of those “major questions” that the US Supreme Court has indicated would require clear and direct statutory language. No such statement exists in the Clean Air Act or any other statute.

The House of Representatives in September passed a resolution expressing its position condemning such an interpretation of existing law. That measure is just a resolution for now, which doesn’t technically bind the agency. If the Republicans control all of Congress in January, this resolution could be passed as a law to clarify that the EPA lacks this authority.

Alternatively, the new Congress could simply use the appropriations process and the Anti-Deficiency Act to preclude the EPA from spending any money to implement the new rule, a kind of de facto but less permanent way to constrain the effect of the current rule.

As Justice Antonin Scalia cautioned more than 20 years ago in Whitman v. American Trucking Associations, Inc., Congress doesn’t “hide elephants in mouseholes.” The elephant of the EV mandate isn’t hidden in a pollution control mousehole, but the EPA is creating regulatory conditions that cleverly avoid the language of a ban on gas-powered vehicles and cleverly avoid the word mandate.

Creative drafting shouldn’t shield their actions from constitutional review, however—especially after the US Supreme Court’s June 2024 decision in Loper Bright Enterprises v. Raimondo, which held that administrative agencies don’t get deference to their own self-serving interpretations of their authorizing statutes (such as the Clean Air Act).

The new emissions rules would impose conditions for pollution reduction that would make it practically infeasible for car manufacturers to maintain a significant fleet of production of gas-powered vehicles in the long run.

This is no way to regulate. It exceeds the agency’s authority, and it forces consumers to accept a market for vehicles that their demand didn’t create. Like any product, the market demand will emerge for EVs when it makes sense for consumers.

Earlier this year, several states also filed a lawsuit with the US Court of Appeals for the District of Columbia Circuit challenging the mandate—formally titled a petition for review because the Clean Air Act allows certain lawsuits to be initiated by petition directly to the court of appeals. The challenge is a solid one and will need to continue regardless of the new Trump administration’s regulatory preferences.

The limits of agency authority and demand for clear congressional authority before agencies may act are concepts grounded in the separation of powers. Under the major questions doctrine articulated in the 2022 Supreme Court decision in West Virginia v. EPA, an agency may not claim “highly consequential power beyond what Congress could reasonably be understood to have granted.”

In that case, even the EPA—an environmental regulator—was told it couldn’t regulate carbon emissions from its proposed generational approach under the regulations in question because there wasn’t “‘clear congressional authorization’ to regulate in that manner.”

The crux of the Supreme Court’s holding is that if Congress wants an administrative agency to have authority in major, sensitive areas that would normally be subject to serious deliberation and balancing, Congress must expressly grant it. The courts shouldn’t infer it.

The EV mandate sets pollution standards for cars sold in 2027 and beyond that simply can’t be met unless there is a dramatic shift to EV production. The EPA admits that even its lowest-cost scenario will effectively require at least 56% of vehicle sales in the country will be electric to meet the top-down pollution reduction mandates. This must happen regardless of demand.

By not buying EVs yet, consumers create incentives for producers to make their products better so that consumers will eventually want them. If the producers are required to pump out EVs on an artificially designated government timeline, and consumers are essentially forced to buy EVs because they will need cars and have few alternatives, there is less incentive for producers to make EVs better for consumers.

If EVs become affordable and practical alternatives to existing choices, consumers will come. Our free-market system supplies products when producers respond to bottom-up, voluntary consumer preferences. It doesn’t work in the reverse, where forced-hand production leads to forced-hand consumption.

With litigation already filed, the EV mandate will be tested in court. The resolution of it should be easy. The mandate is simply bad economics executed through unauthorized, and thereby unconstitutional, means.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Donald J. Kochan is professor of law and executive director of the Law and Economics Center at George Mason University Antonin Scalia Law School.

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